Happier customers and more sellers: How FBA will help Amazon in Australia

Amazon Australia has launched Fulfilment by Amazon (FBA), the service which takes cares of the logistics on behalf of Amazon’s third party marketplace sellers.

For a fee, businesses send their products to Amazon’s Australian fulfilment centre and Amazon picks, packs and delivers the product once an order is made. The ecommerce giant also handles all customer returns.

The introduction of FBA and the launch of Prime in mid-2018 is expected to have a major impact on Amazon’s growth in Australia, which launched its Melbourne warehouse and local website in December 2017.

Juozas Kaziukėnas, founder of Marketplace Pulse which tracks the performance of ecommerce marketplaces, explained the benefit of FBA for Amazon is two-fold: better customer experience and a wider range of products available from international sellers.

“FBA in other countries has enabled worldwide retailers to sell on Amazon, for example the majority of sellers in the US are international and competing head-to-head thanks to that. It’s an equaliser,” Kaziukėnas told Which-50.

“If anything it should also enable previously unavailable products to Australian customers from brands which were too small to handle their own distribution.”

When Amazon first launched in Australia around one in five reviews on the site were negative, mostly due to cancelled orders and late shipping. FBA takes away that pain for consumers and Kaziukėnas expects the portion of dissatisfied customers will continue to drop.

“The number of negative reviews which initially was pretty high has been decreasing ever since, and is now just 8 per cent. Once FBA fully deploys it will go down further to 4 per cent,” he said.

According to Marketplace Pulse data, there are now up to 7,000 sellers on Amazon.com.au. At last count 47 per cent of those were from Australia and 43 per cent were from China.

Marketplace Pulse’s software monitors where the seller’s warehouses are based, however, the number of foreign sellers will soon become opaque thanks to FBA. Once Amazon is responsible for the warehousing, dispatch and delivery of products on behalf of its third party sellers, the seller’s shipping location disappears.

This is why in the US it is impossible to tell where sellers are from because most use FBA.

“Size doesn’t matter in the digital economy and Amazon Marketplace helps to level the playing field when it comes to starting or growing a business,” said Amit Mahto, Head of FBA in Australia.

“We are focused on helping Australian businesses of all sizes succeed by inventing on their behalf and making our technology available to them and FBA is a fantastic example of this. Customers shopping on amazon.com.au will be able to access an ever growing and more unique range of products accompanied by the convenience of fast delivery and Amazon’s world-class customer service.”

Sellers are charged for the storage space and the orders Amazon fulfils. The cost of shipping is included in fees. For a limited time Amazon is running an introductory promotion giving sellers access to free storage and removals when enabled in March, until 31 August 2018.

“With the help of FBA, we’ve been able to enter countries including the US and the UK, which we could have never done on our own,” said Kevin Lippy, founder of the Sydney-based baby brand Hip Cub.

“Fulfilment by Amazon really changed the game for us, and we’re thrilled it is now launching in Australia. FBA has allowed us to concentrate on the things we’re good at such as digital marketing and product development, leaving the logistics such as packing and delivery to Amazon.”

The Author

Tess Bennett

Tess Bennett is the editor of Which-50 and is responsible for leading the publication’s daily coverage of Australia's digital businesses for C-Suite executives, strategists, founders and directors. As the former editor of Internet Retailing Australia and journalist for Inside Retail, Tess has five years experience covering retail and ecommerce. At Which-50 Tess reports on a broad range of topics including technology, the industrial internet, analytics and digital marketing.

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